Here’s How Elon Musk’s Fortune Has Benefited From Taxpayer Help

Tesla saw worldwide sales of 627,000 vehicles and net profit of $3.2 billion in the first nine months of this year, both records for the company. But global sales at Toyota were 10 times greater and net sales were 2.3 trillion yen, or $20.3 billion, more than six times Tesla’s.

Yet Tesla shares more than three times the value of Toyota’s market cap. And Toyota is the second most valuable automaker in the world. Tesla’s market capitalization is roughly equivalent to that of the world’s 12 largest automakers combined.

Without taxpayer support, neither Tesla nor SpaceX would have survived this long, and investors would never have had the chance to bet massively on either company.

Don’t take our word for it. Ask Musk himself.

Billions in legal credits

“Closest to what we have” [to bankruptcy] was about a month ago,” he said in that 2020 tweet. “The Model 3 ramp was under extreme stress and pain for a long time — from mid-2017 to mid-2019. Manufacturing and logistics were hell.”

What Musk didn’t say was that one of the keys to keeping the company alive was selling regulatory credits to other automakers.

Environmental regulations require companies that fail to meet emissions standards to pay fines or purchase credits generated by companies that comply with the rules. And no one had more of that credit to sell than the all-electric Tesla.

Between 2008 and the first half of 2019, regulated credit sales generated more than $2 billion, which was critical to the company’s survival. And the increased car sales have since led to additional credit that Tesla has sold for an additional $3 billion since June 2019.

“It really was US taxpayers who got him through his toughest time,” said Dan Ives, technical analyst at Wedbush Securities, which is a bull on Tesla stock today. In 2019, he was still skeptical as the company struggled.

“If it didn’t have legal credits, Tesla wouldn’t be the brand it is all over the world, and Musk wouldn’t be the richest person in the world,” Ives said.

Other Billions for Tesla

Tesla buyers previously received a total federal tax credit worth an estimated $3.4 billion the benefit disappeared completely at the end of 2019. Even if it only allowed Tesla to raise prices by half, that’s an additional $1.7 billion in federal aid, on top of the $5 billion it has received so far from legal aid. credit sales.

NASA saves SpaceX

And then there’s SpaceX, a smaller but still significant source of Musk’s wealth. The taxpayer’s support for this venture is even more apparent, as it comes in the form of direct government contracts worth billions.

According to Sam.gov, the government database that tracks federal spending, Space X has signed contracts worth nearly $10 billion. None were more important than the ones the company received just before Christmas in 2008, when Space X and Musk were both virtually out of money.

Which contract to fly 12 resupply missions to the International Space Station was worth $1.6 billion. The deal was pivotal as it allowed the company to complete work on its Falcon 9 rocket, its main workhorse, as well as the Dragon capsule that would carry supplies and eventually crew, said Casey Dreier, senior space policy advisor for the Planetary Society. , a public interest group that advocates space travel.

“They were on the brink of insolvency,” Dreier said. “Elon pointed out that they were on the brink at the time and that helped save the company.”

Dreier said the ISS and other contracts have also worked out well for NASA, allowing the agency to use SpaceX instead of relying on the Russians to transport American astronauts.

— Jackie Wattles of CNN Business contributed to this report.